Snap to Halt Production of Its Pixy Drone Amidst Deteriorating Economic Conditions

Just four months after its launch, Snap is scaling back production of its Pixy drone.
Snap to Halt Production of Its Pixy Drone Amidst Deteriorating Economic Conditions

The snap Inc. company has revealed that it is going to stop manufacturing the Pixy selfie drone, a product that the company introduced four months ago as a new way of creating content as it deals with increasingly dismal economic conditions.

Snap's $230 Pixy drone flies a few feet above you, capturing photos and videos -- and the contents of those uploads automatically to your Snap Memories. The drone then folds up to fit in your pocket, becoming just the handy additional capture device pairing well with your phone.
But demand apparently hasn't been huge for the tool.

According to The Wall Street Journal:

"Snap Chief Executive Evan Spiegel recently told staff during a regular question-and-answer session of the decision around the Pixy drone. The effort to halt further development of the project is part of broader reprioritization of company resources, Mr. Spiegel told staff."

Snap won't stop selling Pixy at this stage, but it does seem like once the current supply is sold out, that could well be it.

Still, it was a bruise to Snap's broader hardware expansion, even though it is not the first time the company has had to deal with lower than expected demand.

The first iteration of Spectacles, camera-equipped glasses, launched by Snap in 2016, made a lot of publicity in the very early stages but did not lead to major revenues. Reports at the end of the first year of Spectacles said that Snap had underestimated the demand for the glasses and left hundreds of thousands unsold sitting in a Chinese warehouse.

Snap CEO Evan Spiegel later admitted that the company had made a mistake in ramping up the production of Spectacles based on early demand.

That is not the same case this time around with Snap simply facing tougher market conditions and being forced to rationalize current expenditure to keep things on track.

Earlier this month, Snap said it would "substantially reduce" hiring as part of a broader round of cost-cutting efforts, while in May, it also issued a profit warning on account of a worsening 'macroeconomic environment'. Part of that can be attributed to the global downturn, which has afflicted all digital platforms, while Apple's ATT update has also posed major challenges for Snap's ad business.
The end result would be that Snap will have to scale back its expansion plans, which may also impact the future of its AR Spectacles still under development and take a back seat while working to maintain financial performance.

That's why this is an even bigger deal than the de-prioritization of Pixy the drone itself. Really, if Snap were to just shut down development of Pixy as a product entirely, that wouldn't really be much of a strategic shift, since it's so early on in the product's development that it simply can't be a critical component for the company yet.

But taking the initiative from a broader vision perspective, the announcement signals the scale of the impacts that Snap's dealing with, to ensure that it remains on track.

Could that see a bigger reduction in Snap's research and development costs overall-and what will that mean for its longer-term bets?
But not renewing the Pixy project is one thing, but that it has had to move on from it so early perhaps sets much greater considerations for this shift.

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2024-11-12 03:03:03